Intraday Limit on Index Options Trading to be Reintroduced by SEBI from October 1

Effective October 1, 2025, SEBI will implement new intraday position limits for index options traders. This initiative aims to manage excessive volatility and protect market integrity through real-time monitoring and enforced penalties.

New Position Limits to Curb Intraday Risk

SEBI’s revised framework caps gross intraday positions in index options at ₹10,000 crore on a futures-equivalent basis. Net intraday exposure must stay within ₹5,000 crore. This aligns trading activity with robust risk management without hampering liquidity or genuine hedging operations.

Expiry Day Focus: Tighter Controls and Penalties

The regulator has expressed concern over disproportionate positions being taken on options expiry days. To tackle this, stock exchanges must use at least 4 random intraday checks, including one between 2:45 pm and 3:30 pm. Positions over limits on such days may lead to surveillance deposits or penalties.

Enforcement Through Real-Time Surveillance

Exchanges will compare intraday positions with the real-time index value, ensuring accurate profiling of exposures. Any participant breaching limits will undergo detailed scrutiny. Authorities will seek a rationale, study underlying index trades, and escalate cases to SEBI if required.

Read More: SEBI Proposes New Closing Auction Session to Make Stock Prices More Stable!

SOP and Infrastructure Overhaul for Compliance

Stock exchanges and clearing corporations must submit a joint SOP within 15 days. They also need to strengthen systems, operations, and bylaws. These reforms aim to safeguard orderly trading and preserve fairness in India’s booming derivatives market.

Objective to Balance Market Activity and Control

SEBI clarified the move targets speculative excess, not productive trading. Market makers and liquidity providers are allowed an expanded scope if backed by securities or cash. The new structure seeks to maintain a balance between operational ease and market integrity.

Conclusion

SEBI’s reintroduction of intraday limits for index options is a firm step towards enhancing market discipline, especially on high-risk expiry days. The structured surveillance and defined limits are expected to foster a more resilient trading ecosystem while curbing unintended shocks.

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